Fast-growing Energy Recovery Inc. has snapped up a giant manufacturing facility and office space in San Leandro and made a $20 million acquisition to fuel its expansion.

The 10-year lease, valued at $10 million, will allow the maker of energy recycling devices to triple production over the next two years and double its 95-person employee base.

San Leandro-based Energy Recovery Inc. has moved into a 165,000-square-foot facility, a one-time home of Bell Labs, where it will continue to assemble the ceramic turbine systems it develops that capture energy used in desalination — the process of separating salt from seawater to create fresh water.

With the larger space, the company plans to make up to 50 percent of its own turbines from ceramic powder, a job that is now outsourced. And the company will invest $16 million in its ceramic research and technology center to test future devices for uses in desalination plants and possibly other applications.

Energy Recovery started out in 9,000 square feet in San Leandro in 2000 and had expanded to 42,000 square feet in three locations by 2007. It had different locations for its administrative offices, manufacturing and warehouse space.

Executives decided to bring the company together under one roof, said Terry Sandlin, Energy Recovery’s vice president of manufacturing. The company looked throughout the East Bay and ended up moving to 1717 Doolittle Drive, a former phone factory across the street from its previous manufacturing facility.

“We have a 10-year lease — enough space to triple our capacity,” said G.G. Pique, the company’s chief executive. “We want to grow with the industry.”

He also said though the company could afford to buy its building, leasing was a better option.

“A company like ours has unlimited opportunities to invest in new ideas and technologies,” Pique said. “Our money should be put in technology, not buildings.”

Energy Recovery was founded in Virginia in the early 1990s and produced its first commercial design to recycle energy used in desalination in 1999. The company moved to San Leandro in 2000, with 12 employees.

Revenue jumped from just over $20 million in 2006 to $52.1 million last year, though it’s expected to slip to about $47 million for 2009. Profit grew even faster, from $3.64 million in 2006 to $12.9 million last year.

Pique said the company is in good shape and is seeking acquisitions because “that’s what you do when you have $80 million in cash.”

It sunk $20 million on Dec. 2 into New Boston, Mich.-based Pump Engineering, plus $1 million in stock. Pump Engineering makes a competitive energy-saving technology for desalination but also makes the high-pressure pumps and booster pumps that generate power in the desalination process.

“We can offer all three in a package now,” said Pique, adding that for the time being, Pump Engineering’s manufacturing will remain in Michigan.

Pump Engineering made $9.3 million in revenue in 2008 and is expected to make between $8 million and $9 million this year, and $13 million to $15 million in 2010, according to unaudited financial statements.

Energy Recovery has sold 6,000 of its devices, almost entirely outside the United States, including in Australia and Algeria where fresh water is scarce and desalination plants are often used. But 45 plants are in various stages of development in the United States, and Pique said he expects the U.S. market to blossom for his company after the first U.S. plant using his devices (likely in Carlsbad or Monterey) is up and running. Pique said his devices improve the energy efficiency in the desalination process by up to 60 percent.

A Carlsbad plant using Energy Recovery’s product instead of traditional steel devices will save $2 million to $3 million a year, he said.

The company said it will ramp up its workforce to near 200 between now and 2011 as it builds capacity at its warehouse. While most of its customer base is outside the Bay Area, Pique said staying here allows the company to attract a talented workforce.